Looking for funding to grow your textile business? Learn about the government schemes offering loans for textile entrepreneurs. From the PM-MITRA initiative, which seeks to create state-of-the-art textile parks, to the Technology Upgradation Fund Scheme designed to modernize equipment, and the SAMARTH program dedicated to upskilling the workforce, we’ll uncover all these Government schemes and policies.
The Significance of India’s Textile Industry
India’s textile industry is one of the oldest and most significant sectors of its economy. It accounts for 2.3% of India’s GDP. India is the world’s largest cotton producer and the second-largest producer of textiles and apparel.
For a detailed discussion on the state of the textile industry, Check Episode 39 and Episode 41 of MSME TALK Podcast. These episodes covered the state of India’s textile industry, highlighting its current status, industry’s competition, its structural issues, and challenges in man-made fibres.
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Government Schemes Supporting the Textile Sector in India
Here’s a brief information about India textile industry government schemes, including textile industry financial assistance, Incentives for textile businesses, policies and programmes the central government of India has implemented in the past few years along with useful links for those Textile Sector schemes. These schemes address various industry challenges, such as the need for upgraded technology, skilled manpower, and fragmented supply chains with focus on India textile industry government schemes.
S.No. | Name of the Scheme | Scheme Category | Who can apply? | Duration | FY25 Budget (Rs. Crores) | Remarks / Components / Implementation of the Scheme | Links |
1 | PM-MITRA | Textile parks | Developers & Textile Manufacturers | Up to FY28 | 300 | 7 parks; potential investment of Rs. 70k crore | |
2 | Textile Cluster Development Scheme (TCDS) | Cluster development | FY21-FY26 | 100 | Various components under this scheme. | ||
2a | Group Workshed Scheme | Modernising power looms | State Govt., Co-op Socy., Company, Powerloom Association | FY04-FY20 | * | The government subsidises 40% of construction cost of a modern loom. | |
2b | Comprehensive Powerloom, Knitwear & Silk Mega Cluster | Developing powerloom clusters | Powerlooms | FY09-FY20 | * | The government subsidises 60% of the development cost of power loom clusters. | |
2c | Facilitation, publicity. IT, MIS and admin expenses | Publicity | Internal | FY18-FY20 | * | Giving wide publicity of various programmes and cover administrative cost for TCDS. | |
2d | Grant-in-Aid to Non-TxC Powerloom Service Centres | Meeting expenses | Internal | * | Modernising and upgrading powerloom service centres which do not come under Textile Commissioner. | ||
2e | Pradhan Mantri Credit Scheme for Powerloom Weavers | Credit requirements of weavers | Weavers | * | Credit given under 1. PM Mudra Yojana, and 2. Stand Up India Scheme. | ||
2f | In-Situ Upgradation Scheme for Plain Powerlooms | Upgrading small powerlooms (<8 looms) | Powerlooms | * | The government subsidises 50% of the upgradation costs for power looms. | ||
2g | Scheme for Integrated Textile Park | Textile parks | Developers & Textile Manufacturers | Since 2005 | * | Out of 50 sanctioned projects, only 30 are completed. Total operating units = 2175; and target = 5000. | |
3 | Technology Upgradation Fund Scheme | Technology upgradation | Since 1999 | 635 | The government subsidises 10-15% of the capex for buying new machines (as per the notified list of machines) | ||
4 | Scheme for Capacity Building in Textile Sector (SAMARTH) | Upskilling workers | Textile industry, institutions, entrepreneurs, startups, etc. | FY17-FY25 | * | More than 3 lakh people trained under entry level and more than 18k under re/up-skilling programmes. | |
5 | Integrated Processing Development Scheme (IPDS) | Making textile processes eco-friendly | Processing clusters | FY13 -FY26 | 30 | Projects gets divided among Centre, State, Beneficiary and Bank Loan in the ratio 50:25:15:10. | |
6 | National Technical Textile Mission | Boosting technical textile | Research institutions, academia, etc. | FY21-FY24 | 375 | Contains four components: R&D, Promotion & Market Development, Export Promotion, and Skill Development. | |
7 | Production Linked Incentive (PLI) Scheme | Man-made fibres & technical textiles | Large textile players | FY26-FY30 | 45 | Companies will have to achieve targets for each year to get incentives from the government. Incentives range between 7% and 15% of incremental sales. | |
8 | Silk Samagra 2 | Silk sector development | Farmers and entrepreneurs | FY22-FY26 | * | R&D, Training, Seed organisation, Quality control, Export promotion, etc. | |
9 | National Handicraft Development Programme | Handicraft sector development | Artisans | FY23-FY26 | 206 | Market support, Skill development, Direct benefit to artisans, Infra & tech support, R&D | |
10 | Comprehensive Handicrafts Cluster Development Scheme | Handicraft cluster development | Artisans and SMEs | FY23-FY26 | 30 | Develop infra, Skill development, Promotion, Tech upgrade | |
11 | National Handloom Development Programme | Handloom sector development | Weavers, SHGs, Co-op societies, etc. | FY22-FY26 | 200 | Cluster development, marketing assistance, export promotion, Concessional credit, | |
12 | National Jute Development Program | Jute sector development | Farmers, Manufacturers, Cooperatives, Artisans, Research institutions, etc. | FY22-FY26 | 80 | Cultivation, diversification, Promotion, Scholarships, etc. | |
13 | Integrated Wool Development Programme | Wool sector development | Wool growers, processing units, Cooperatives, Research institutions, etc. | FY22-FY26 | 20 | Marketing, Processing, Skilling & training, Pashmina Wool Development |
Sources: Textile Ministry. * Note: For some schemes, the budget documents have not specified exact amounts. Allocation for such schemes might have been classified or clubbed in another head. A scheme like SAMARTH is implemented in coordination with the Ministry of Skill Development & Entrepreneurship. Its budget allocation has not been specified separately.
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Each scheme will need a separate article of its own. In this blog , we will discuss a few benefitting MSMEs, directly or indirectly.
Spotlight on Major Schemes for Textile Industry:
PM-MITRA (PM-Mega Integrated Textiles and Apparel Park)
One of the flagship programs is the PM-MITRA (PM-Mega Integrated Textiles and Apparel Park). This scheme aims to establish seven integrated, large-scale textile parks with modern infrastructure and facilities. They will be located in Virudhnagar (Tamil Nadu), Warangal (Telangana), Navsari (Gujarat), Kalaburgi (Karnataka), Dhar (Madhya Pradesh), Lucknow (Uttar Pradesh), and Amravati (Maharashtra).
The exact completion dates of these parks are not yet available. Once completed, manufacturing activities will commence, making supply chains more robust and reducing logistics costs as major apparel-making activities will be centralized in one area. This is beneficial for not only textile players but also farmers and traders in those regions. For example, the cotton-growing community in the Vidarbha region of Maharashtra will benefit from a textile park in Amravati.
Right now, many parks are in the development stage and the respective state governments are vying with various companies and textile players to set up manufacturing facilities in those parks.
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Textile Cluster Development Scheme (TCDS)
Another important initiative is the Textile Cluster Development Scheme (TCDS). The textile industry often operates in clusters. Many struggled to keep pace with technological advancements, leading to inefficiencies. This scheme aims to modernize them. This scheme has different components of which only the Scheme for Integrated Textile Park (SITP) is currently operational.
In the last few years, the number of sanctioned parks has fallen from 54 to 50. There are 2175 units operational, and the ambition is to see more than 5000 units running in those parks. This scheme came into effect in 2005.
The Technology Upgradation Fund Scheme (TUFS)
The Technology Upgradation Fund Scheme (TUFS) is a significant initiative aimed at modernizing India’s textile industry. It provides a credit-linked subsidy for capital investments, offering up to 10-15% of the capital expenditure. MSMEs account for 89% of the total beneficiaries of this scheme.
The SAMARTH Scheme
The SAMARTH scheme, short for Scheme for Capacity Building in Textile Sector, addresses the capacity gap by upskilling individuals and making them job-ready for the textiles sector. So far, 3.3 lakh candidates have been trained under this scheme, which is set to continue until March 2024.
(Also, read MSME TALK Blog on this Government scheme which is making it easy for small businesses to grow: CGTMSE Scheme- A Government scheme empowering Micro and Small Enterprises with Collateral-Free Credit)
Integrated Processing Development Scheme (IPDS)
Environmental concerns in textile manufacturing are also being addressed through the Integrated Processing Development Scheme (IPDS). This scheme supports the upgrading of emission plants in existing processing centres and the establishment of new parks focused on water and wastewater management. Seven projects have been approved under IPDS, primarily in Rajasthan, though key textile states like Maharashtra and Tamil Nadu are not yet included.
National Technical Textile Mission
National Technical Textile Mission ended in FY24. The mission had four components: R&D, Promotion and Market Development, Export Promotion, and Education, Training, and Skill Development.
The Production Linked Incentive (PLI) Scheme
The Production Linked Incentive (PLI) Scheme is another flagship program aimed at incentivizing large-scale manufacturing. This scheme focuses on promoting man-made fibre (MMF) apparel, MMF fabrics, and technical textile products, excluding natural fibre products like cotton or wool.
Companies must meet annual production targets to receive incentives, which will be available from FY 2025-26 to FY 2029-30. The PLI scheme targets large players to boost manufacturing in India. However, a large textile manufacturer relies on numerous smaller companies for various processes. Thus, MSMEs are the indirect beneficiaries of this scheme.
Others
Apart from this, the textile industry also benefits due to the entry of foreign companies through FDI (or foreign direct investments). The idea of a new foreign entrant stresses incumbent businesses. However, in the long run, the sector benefits from higher competition. Any foreign company can own 100% business in India within this sector. From April 2000 to March 2024, India has attracted $4.5 billion in FDI in textiles.
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Conclusion
While the sector faces significant challenges, the government’s proactive approach through various schemes like PM-MITRA, TCDS, and the PLI Scheme showcases a commitment to modernization and growth. However, the performance of these schemes may not always meet expectations.
India can transform its textile sector into a global leader, but it needs to evaluate these schemes continuously through various feedback mechanisms and taking corrective actions.
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